They have piles of them that the water being treated flows over and down. They provide surface area for aerobic bacteria, which eat the impuritieis. Aerobic bacteria don't cause foul odors but anerobic bacteria do.

That's why you want air to have access to your holding tank, so the aerobic bacteria can live and the tank doesn't go anerobic.

You can see something similar to those disks at aquariums where they are also used in the filter system for the same reason.